Thailand's PTT trumps Shell with £1.22bn offer for Cove

Thailand's PTT Exploration & Production has trumped Royal Dutch Shell with a
£1.22bn agreed takeover of Cove Energy, in the latest twist in the bidding
war for the Mozambique-focused oil and gas explorer.

Wednesday was the deadline for Cove's shareholders to accept Shell's deal and on Monday Cove had urged them to do so, as Shell was "the only firm bidder and.... has already secured the consent of the Government of Mozambique".

But Cove said on Wednesday morning it now recommended the higher offer from PTT.

John Craven, chief executive of Cove Energy, said: "The bid from PTTEP represents significant value for shareholders and confirms the world class nature of Cove's East African assets."

Shell declined to comment but analysts at Canaccord suggested it would “probably” increase its offer “given the relatively small size of the deal and given the group’s clear intent to build a position offshore East Africa”.

Cove’s prized asset is an 8.5pc stake in the Rovuma 1 block offshore Mozambique, which had been thought to contain 17 to 30+ trillion cubic feet (tcf) of recoverable gas resources. Last week’s discovery added a further 7 to 20+ tcf.

The partners in the project intend to liquefy the gas, to ship to Asian markets.

Shell is one of the world's biggest liquefied natural gas (LNG) producers, and some analysts said Mozambique’s government could therefore favour its involvement in the project, and so deny PTT consent.

Earlier this month, when Shell announced it had secured the government of Mozambique's consent, it said: "Shell can bring its innovative technologies, development track record, outstanding LNG operational experience and proven commercialisation strategies to add significant value to Mozambique and Kenya and the partners in the ventures."